Alliance For Agriculture, a new collective of International agribusiness specialists, is the first of its kind. It aims to turn West Africa’s fields of dreams into viable projects. Wings asks Victor Politis — Founder of PRI, a project development and financial advisory firm, “Why an Alliance and who stands to benefit?”
Words Victor Politis
Everyone in the Agriculture Value Chain will benefit from Alliance for Agriculture. There is opportunity to attract investment while delivering quality food products and good value to the customers of the growing retail sector. Jobs will be created, the economy diversified and transfer of know-how will accelerate development.
We decided to form an Alliance of companies that have complementary expertise and can deliver true turnkey projects to Project Owners. The West African Owners will get maximum value for their Seed Capital; Professionals who trust each other’s capabilities know that they will not be wasting their time on projects that don’t go forward, will work in a timely and cost efficient way.
We have just started attracting International and Regional companies. As of May 2013, in addition to PRI that specialises in Project Development and Financing since 1995, we have members who have been specialising in Aquaculture since 1992, Cattle Rearing & Meat Processing since 1978, Dairy since 2012 and most importantly Farm Management, since 2004. We will continue to expand the Alliance by bringing on board leading Equipment Manufacturers, Input Manufacturers, Experts in areas like Branding, Packaging, Logistics and Storage, as well as Investors and Agricultural Financing Banks.
The Objective of the Alliance is to put the combined track record of the member companies to work to:
• Focus on large-scale projects that can drive change
• Prepare projects impeccably and address as many of the perceived risks as possible, to create the ‘WOW’ factor
• Make International Investment Funds take notice
• Cut down the cost and time of development
There is a lot of talk about food security, which is as much about logistics as it is about farming and processing. There is ample fertile land in West Africa and enough applicable international expertise to make it productive.
Governments and the Private Sector are aware of the importance and opportunity. So, why isn’t it happening at a faster pace?
• In an oil rich region there appear to be quicker and easier ways to make a profit
• Large projects require vision, long-term thinking, technical expertise, professional management and substantial amounts of financing at supportable rates. All of these components are available in West Africa but unless an experienced team coordinates, projects don’t materialise
• Most African Banks don’t have extensive experience in dealing with large and complex agriculture projects. They ask for types of collateral that are simply not available.
• Nigeria alone spends only 3% of its national budget on the agricultural sector and spends over N24.5 trillion (over $155billion) on food importation per annum, which does not take into account food commodities that enter the country illegally.
• Lack of good infrastructure causes much of the food produced to spoil before reaching its target markets
In 2012, Nigeria’s Senate President, Senator David Mark, told This Day Newspaper that only 5% of the country’s farmers have access to modern seeds and the nation uses 13 kg of fertiliser per hectare, compared to the global average of 100 kg per hectare. Meanwhile, only a meagre 1% of bank loans go to agriculture, yet this is a sector that employs about 70% of the population and accounts for 44% of Gross Domestic Product.
In the mid-’90s, we formed a similar Alliance for Property Development in the Former Soviet Union. Designs for housing, office buildings and mixed-use projects were being done according to outdated Soviet standards. PRI responded by importing experts in the various disciplines. The result was world-class sustainable projects. If you have to import expertise, it must be the best talent, specifically experienced in the particular sector that you are developing. We teamed up all the international experts with local partners, which resulted in serious capacity building.
We witnessed the benefits and decided that the time is right to create a similar Alliance for Agriculture in West Africa, especially since large-scale projects are not being implemented at the required rate to ensure Food Security.
Most people want to see an improvement in food production and security in sub-Saharan Africa. We’re looking to create awareness among the private sector and government. We say, ‘unless you do things differently, it’s going to go as slowly as it is now. We want to speed up the process of finding innovative solutions that are specific.’ We see a lot of projects that are initiated for political reasons – to satisfy a particular constituency, rather than locating them in the right area for climate and logistics to enable them to flourish.
You can’t be fourteen hours from the market if you have the opportunity to do it two hours from the market. Choosing the site and then convincing localities that they should be contributing at least part of the land – because there’s a lot of private ownership – takes time.
Clearly, opportunities are in abundance, but for so many entrepreneurs, the problem of the projects is finding money, and the problem of the money is finding projects.
However, financing is not the biggest problem. There are billions of dollars available. There’s also no shortage of intelligent people, just a lack of experience. As soon as there are one or two projects that are viable and large enough, the gates open. Having an Alliance of Companies with a track record in their respective specialities gives comfort to the funding sources. If you’re missing one of those components and the Information Package does not address the various risks that are involved in agribusiness, then you don’t attract money.
Building Capacity Is Critical
There is currently a lot of financing available for food security issues in countries that rely heavily on subsistence agriculture.
The Companies that are members of the Alliance for Agriculture are committed to transferring know-how and building local capacity. This ensures long-term positive change and continued availability of investment and creates vast future opportunities for bright young people to become experts themselves and develop their own projects. The potential for positive impact is huge.
Victor Politis, Co-Founder Alliance For Agriculture
Professional farm management mitigates risks much better than other forms of collateral
• Combines experienced agribusiness professionals with appropriate modern, global techniques with in- depth, country specific, operational expertise.
• Selects appropriate genetics best suited to the particular geography and continues to screen new genetics for enhanced suitability
• Maximizes timeliness of all operations using appropriate large scale machinery and logistics, which is continually monitored utilising GPS and other technologies
• Adds value to primary production through suitable storage and processing
• Brings to existing and start-up projects, the expertise and knowledge to produce under extreme conditions
• Maximizes return on capital, improves local management’s effectiveness and applies strict budgeting and cost control as well as improved product marketing to optimise sustainability